 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and it's ecosystem partner. Okay, welcome back everyone. Live here at VMworld 2017, day three wrap up. We're going to wrap up the whole show. I'm John Furrier with Dave Vellante, Stu Miniman, Keith Townsend. Cube set, two sets of coverage. Guys, great job. We had Justin Warren as well. John Troyer, Lisa Martin, great team. Guys, amazing three days. Lot of content, wall-to-wall coverage, double barrel shotgun, a cube content. Amazing. What's left in the tank? Let's get this done. Dave, your thoughts as VMworld comes down to a close. Well, so I missed VMworld last year as you know because I was doing another show. Pat was giving me a lot of grief for that. But if I go back two years ago, two years ago, VMware was shrinking. Its license revenue was in decline. Its cloud strategy was in continued disarray. Customers were kind of, you know, losing a lot of faith. Ecosystem was in turmoil. And the world thought that Amazon was going to completely destroy this company. Fast forward two years later, license growth, you know, 12, 13%, the company's growing is nearly $8 billion, $3 billion of operating cash, big stock buybacks, clarity on the cloud. And I think, and I'd love for Keith's opinion on this, a recognition of the customers that, I can't just throw everything in the cloud. Okay, that's one thing. But what I can do is try to bring the cloud model to my data and AWS, I mean, Amazon, sorry, VMware is going to be a partner in doing that. And I think those have all been tailwinds along with some product cycles and some- And Dell technology's buying out from the federation which was taken on water. Let's not forget about the federation EMC owned VMware and that was bought by Dell. People talk about the Dell discount. I'm not seeing the Dell discount right now. What is the Dell discount? What the Dell discount is because Dell owns VMware, just like when EMC owned VMware, it somehow shackles them and depresses the value. You know, Michael obviously doesn't agree with it. All right, so product focus as well has been not diminished at all. The products are front and center, they've still got the sessions. Guys, on the product side, what's your view? Strong product offering. I really love the message day one. A lot of the response from the community was like, Pat is feeling energized. He has this shadow of what is going to happen, post acquisition, is there going to be a Dell discount? You know what? VMware, famously five years ago, Pat was on stage and he said he's going to double down on virtualization. He jettisoned Pivotal and we're all wondering, what is he doing? Proved over the long run, he was right. Last year, this year, he's doubled down, not on just virtualization, but on this concept of SDDC, and it's finally starting to pay off. We're seeing consistently this concept of VCF, VMware Cloud Foundation on-premises, off-prem, and even in AWS, what ironically, you know, three, four years ago, we were like, well, is OpenStack going to eat VMware's lunch? VMware has turned the tables and become that OpenStack layer, that consistent cloud layer, at least for that legacy type of way to do IT, taking your internal data center processes and moving them to the cloud consistently across their VCAN network and the AWS. So if I get this right, you're basically saying that VMware essentially went from a position where they're twisting in the wind at all levels, turmoil in every department, every house is on fire, to pulling one major bold bet, wrapping it out of the hat, kicking ass, taking names, Pat Gelsinger made a team, made good calls. You know what, I'm not a fan of calling what VMware's SDDC thing a private cloud. I don't think it's true private cloud. It is valuable to the infrastructure, but it's not private cloud, but customers love the message. Take what I'm doing now, check a easy box, move it into AWS or VCAN and it's resonating. Well certainly Stu's just giving the ideas because the true private cloud report from Wikibon, which has been going viral at the show, been the talk of the show, and so everyone's been talking about is Wikibon's true private cloud report. People love that too because the message is simple. Take care of business at home called the on-prem. Yeah, change the operating model, that's going to take some time. Yeah, so my thought on this is, for years we were talking about the stack wars, lately we've been talking about the cloud wars, and for the last few years, when I talked to the partner ecosystem, they were shrinking their boosts, they were looking for alternatives. Remember Cisco? Oh geez, fleeing anything but VMware, let's see if we can do this. IBM, who was a big VMware partner, well they got RedX 86, where are they going to partner with VMware? On and on, HPE, going closer with Microsoft, even Dell, pre-acquisition, how much deeper are they going to go with Microsoft? Now, John, we've been talking on theCUBE for a while, there's Microsoft, their stack, their partnerships, their application, where they're putting it. Amazon, huge elephant in the room, when they made the deal it was like, oh well, Pat's on his way out the door and he's kind of pulling one over on Dell before he leaves. Now, I think we understand a little bit better where this fits in that portfolio of the Dell family. Open source, still something, we've beat on Pat and EMC before that, they're not really open source, they've got a proprietary software alternative that their partners seem excited about. Veeq, they really fumbled around with their cloud strategy for a year, they've got one that seems to be going well. We'll see, 4,500 service provider partners, the Amazon thing, we will still see where revenue comes. Still, that's a good point. Pat Gelsinger was kicking as a CEO now but was challenged on his job many times, so props to Pat, he made some good calls, stayed on course, held the line on the direction, did not cave at all, him and his team, they did it, there's been some turnover, as we know in VMware, obviously the results are clear, the scoreboard, they're winning. Question that I'll put to you guys right now, impact of Andy Jassy from AWS here on day one, how much of an impact was that? He made some statements and the question I want to ask you in addition to the impact is, he said, this is not an optical deal, most companies make optical illusional deals, make it look like they're all in and they don't really deliver. So, one, impact of Jassy being here, and two, who is he talking about? Well, well- What was the Barney deal? Well, so, okay, so first thing is I saw, I've always seen that AWS deal from Andy Jassy's perspective as TAM expansion. Big part of a CEO's job is I got to expand my TAM, especially when you see the growth of AWS and it's slowing down a little bit even though it's still impressive, he's got to expand his TAM, so how does AWS do that? Look to 500,000 VMware customers. So, that's number one. Barney deal, there are a lot of Barney deals out there. I mean, most- Who's he referring to? Because Google came on the stage the next day, I was getting tweets saying, Azure, Stu, guys, who's the deal? Who was Andy Jassy talking about? When he was looking at the VMware customers and saying, essentially, this is not implying others are. I'm not sure that he was necessarily throwing shade at anyone specifically. What there was is there was 18 months from when this deal went through, a lot of work. This was a lot of engineering work. Talked to the Cloud Foundation team, talked to the VSAN team, the amount of work to actually integrate because we know Amazon actually has an extensive engineering team. They hyper-optimize what they are doing. So this is not some white box that I just slapped VMware on and said, yeah, the BIOS, it works and everything. Where I still am a little concerned if I'm a VMware employee is customers, I talk to some customers that are really excited about this, the Lighthouse customers, they say, it's going to get my team that loves their vCenter, they love everything. It's going to help them move faster. And then you talk into, oh, there's these services that they're going to be able to use. I'm like, well, how much are they going to realize? Oh, hey, this is great. And the VMware sales reps are going to just get eaten by the lion while the customer goes off. So the impact's big then from your saying, but you won't answer the question of who he's referring to. You don't think he's referring to anyone. What do you think? Let's look at, I like the comment about how difficult the integration was. Last year when I read this, I'm like, wait, hold on, what? The AWS who is notorious about controlling their message. What I thought was funny is that, Andy didn't use the term private cloud. He didn't use the term VMware cloud. He VMware infrastructure in AWS, which is a massive engineering effort. So from that, I question whether or not they could execute upon that, but any Jassy being on stage on Monday showed the commitment that we're going to make these other services work. The total addressable market of 500,000 additional customers. You don't do this for bare metal servers. VMware has 500,000 customers. Yeah. Yeah, that's a great total addressable market, but that's not where AWS is going to grow by hosting physical servers, by selling more Lambda, selling more CDN, selling more pass is the key. And where VMware and AWS relationship is weak is in that true integration between the two hybrid IT environments. So when you say, where's the Barney deals? The Barney deals are, I think it's across the industry. Unless you're getting fully imbed and committed to make that level of investment. Engineering resources. This comes back down to what the new kind of engagement between biz dev deals look like. You need to have that kind of level. I have no problem pointing to the Nutanix Google deal. Anything that people are doing with Azure, no one's partnered at this level. Okay, Azure is a good one too, because I've heard from startups that have been enticed by the dollars because Microsoft's been sprinkling some cash on who have left to go back to AWS because of technical reasons, reverse proxies, basically clued software cluges that basically make stuff work. Well, so, how much do we know about the IBM VMware relationship? Because, I mean, IBM's software hosting, right? They've got a lot more experience with VMware. IBM has said, hey, I think they're shipping. They've been shipping for quite some time. So there's an example of engineering that had already largely been done that's actually delivering value for customers. Pat probably brought it up because it's a great distribution channel for him. And I think it keeps right on. AWS doesn't speak in terms of VMs. They talk in terms of cloud services, like Lambda, database services, middleware, PAS layers. That's really where they're going to hook people in this community into their platform. Okay, so here's a question to end this segment as we wrap up the show, because this is kind of where it's all going. To me, my big epiphany was the following. Andy Jassy, statesman, Harvard MBA, now CEO of AWS, taking names, kicking ass. Huge accomplishment. He's done great in his career. He's only getting better. And then Sam Ramjay, great developer, chops, knows software, ecosystems. Not Andy Jassy in terms of the title, but in terms of status, still a solid guy. Two contrasting positions. Running the biggest cloud today to Google Brain Power. Okay, so you're looking at that, you're saying, hmm, where is this going to go? So the question on the table is, what does it take for someone to be successful in today's IT environment? Does IT need to be smarter in business or does business need to be more smarter in IT or both? And does Google have enough IQ in IT to actually make the products fast enough or are they at risk? Well, I'll take the customer point of view. And we always talk about people process technology. The technology is maturing. And it's maturing pretty quickly, but maybe still not quite to the point where the true private cloud vision is where we need it to be. But what's going to slow that down is the people and process side is going to take a lot longer. Stu, you made a comment yesterday, VMware is moving at the pace of the CIO. It's key flying, he's been using all week. Great line. Robin Matlock heard that today. Of course, marketing, you know, CMO said, and the CIO needs to move faster. Well, guess what, they can't. So, and I thought it was just a perfect- But that is exactly the dilemma, isn't it? Yeah, it really is, and this stuff is hard. And cloud doesn't necessarily make it any easier. If anything, it makes it more complex because it's a completely new business model. But remember the old term fork lift upgrade? Okay, you don't have fork lift upgrades anymore. You have rip and replay. Whatever word you want to use. Now we have lift and shift. Lift and shift, rip and replace, lift and shift. Is Google, and this is my challenge to say, I didn't have time to ask this question, and I'll certainly do one-on-one when I next time to see him. Is Google smart enough with IQ and IT? Certainly we know they're smart enough. But do they have enough IQ and IT to really make the transformation, or are they betting on a rip and replace version of a cloud? So John, no doubt Google's smart, and they built amazing things. That the ripple that Google has through the industry is phenomenal. They spin off whole industries based on what they're doing. Google, playing a very different game than Amazon is. You know, when you talk to customers and how they're first getting onto Google, data's really important. Analytics, of course. Couple years ago, Google was saying, oh, we're just going to be that data analytics cloud. Now, of course, they're trying to be a big player. Amazon, the company, remember, Amazon isn't just AWS. Andy Jassy fits into Jeff Bezos' great plans. I'd love to hear, when we go to re-invent, what's happening to Whole Foods that's impacted by AWS? They are everywhere. They are, you know, what Walmart did. I'm talking about time expansion. My wife texted me, I love Amazon even more. But there's a really interesting, right, because Walmart's now using its muscle to say, hey, you're going to do business with AWS? Absolutely. And Whole Foods, you're not doing business with us. Yeah. So the point being that digital business is allowing companies to traverse industries, and now you're seeing it in really interesting competitive lashbacks. So Capital One was on stage. I've said something over the past couple of years has been controversial. No one believes me, but I believe this is what needs to happen. Capital One claims that it's a technology company. They're not a bank. Well, I want a bank with a bank. That's a whole other conversation. But technology is just a tool to get your job done. And just like, you know, we had bookkeepers that knew Excel and then eventually Excel just became a part of your toolkit. AI, I talked to Chuck Hollis Oracle about this on the podcast the other day. AI is just going to be a business toolkit that a business user uses. To the question, business users will become smarter at using technology. The cloud provider that enables the business user to have at least amount of friction to use that technology to solve business challenges will win. The question is, is that Google or Andy Jassy who has done it with Amazon or some other cloud provider that's eating their own dog food? Okay guys, let's wrap this up. Let's go around the table, one word, two words. How do you wrap up VMware's position vis-a-vis as they go forward? Well, VMware's on fire. I think the data center is on fire. The ecosystem is reforming around the cloud. There's a lot of momentum right now. I mean, I'm wondering, okay, what's going to happen to derail this? But right now the fundamentals look very good. Relevant, John. Yeah. Cool and relevant again. Yeah, yeah, it's right. Cool, we can all argue. Look, I liked what I heard with Amazon. It was better than I was expecting coming in. Getting in there, they talked about serverless. They talked about edge computing, something I actually had a couple really good conversations digging into partners doing IoT and customers looking at that. If they can be relevant, not just in the data center, but in the cloud and even at the edge, VMware's going to have a good life going forward. Yeah, and I'll wrap it up. You stole my word relevant. So I'll say, I'll go a little bit further than irrelevant. VMware is still the leader in enterprise infrastructure software. They're not letting that lead go. Yeah, well, just on that, the last thing, they're an infrastructure software company. I think they showed how they can be more than that in the future. And my take is smart strategy playing out. Now people starting to realize the long game that Pat's been playing, it's showing off in the financial results and there's clarity. And you can see the game playing out. You're starting to see there where they're going to position. So good job, guys. That's a wrap. 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